Dow closes 25,000 for first time since March as US-China trade war is placed on hold

U.S. stocks closed higher on Monday as trade tensions between the U.S. and China dissipated for the moment, while investor sentiment was also boosted by news of dealmaking activity. The Dow Jones industrial average jumped 298.20 points to 25,013.29.

Boeing, Caterpillar and United Technologies, big exporters likely to benefit from easing trade tensions, were the best-performing stocks in the index. Monday also marked the first time since mid-March that the Dow closed above 25,000.

The S&P 500 gained 0.7 percent and closed at 2,733.01 as industrials jumped 1.5 percent. The Nasdaq composite climbed 0.5 percent to 7,394.04 as semiconductors pushed tech higher.

Treasury Secretary Steven Mnuchin said over the weekend the prospect of a trade war was “on hold” following an agreement to suspend tariff threats.

On Saturday, negotiators from the world’s two largest economies said they would continue talking about measures under which Beijing would import more energy and agricultural commodities from the U.S. in an effort to bridge the $335 billion annual U.S. goods and services trade deficit with China.

“This should offer investors some relief over trade concerns,” said Bruce Bittles, chief investment strategist at Baird. “However, we expect that trading jitters will continue as the U.S. still has plans to apply steel and aluminum tariffs on the European Union by month-end.”

Mnuchin told CNBC on Monday the U.S. has made “very meaningful progress” with China on trade matters. “Now it’s up to both of us to make sure that we can implement it,” Mnuchin told “Squawk Box.”

Trump touted the deal, tweeting: “China has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products – would be one of the best things to happen to our farmers in many years!”

Futures rose sharply on the news as worries of a trade war between the two countries in the world decreased. Trade tensions between the U.S. and China kept a lid on stocks last week, as the major indexes slipped.

“In our view the fundamentals remain attractive for further upside in equities stateside and globally in the months ahead so long as progress persists in trade talks with China,” said John Stoltzfus, chief investment strategist at Oppenheimer Asset Management.

Wall Street also got a boost Monday amid a slew of dealmaking news.

General Electric will merge its transportation business with Wabtec, a rail equipment maker, in a deal worth $11.1 billion. GE shares rose 2 percent.

Meanwhile, Fifth Third Bancorp agreed to buy MB Financial for $4.7 billion in cash and stock. MB Financial shares surged 12.9 percent.

Elsewhere in corporate news, Micron jumped 3.3 percent after the company raised its guidance because of a “healthy” semiconductor industry.

Source: CNBC

Leave a comment